South Korea's central bank stated they had bought 14 tonnes of gold in November using its foreign reserves in order to spread its portfolio risks. The Bank of Korea bought the gold for $780 million, their fourth purchase in about a year and a half.

SEOUL, Dec 5 (Reuters) - South Korea's central bank said on
Wednesday it bought 14 tonnes of gold in November using its
foreign reserves in order to spread its portfolio risks, while
releasing data showing total reserves rose after talk of market
intervention.

The Bank of Korea bought the gold for $780 million, the
fourth purchase in about one-and-a-half years and lifting the
proportion of gold in its total foreign reserves to 1.2 percent
from the previous 0.9 percent, it said in a statement.

"Gold is a physical, safe asset and allows (the country) to
deal with changes in the international financial environment
more effectively," it said in a statement, without providing
more details on the purchase.

The Bank of Korea now holds 84.4 tonnes of gold, valued at
$3.76 billion in terms of purchase prices, up nearly six-fold
from 14.4 tonnes before June last year.

The Bank of Korea made its first gold purchase in more than
a decade between June and July last year, joining some central
banks in diversifying their increasing foreign reserves away
from the U.S. dollar and low-yielding government bonds.

Official sector buying has become a key factor supporting
gold demand and prices in recent years.

"It (South Korea's gold buying) points to stronger support
for gold prices from central banks," said Philip Klapwijk,
global head of metals analytics at Thomson Reuters GFMS, a
metals consultancy.

"If private sector investment falters and prices dip,
central banks' buying supports prices at higher levels than if
this demand were not present. It is a substantial additional
source of demand for gold bullion."

Central banks around the world bought a total of 351.8
tonnes of gold in the first nine months of 2013, up 2 percent
from a year earlier, data from the World Gold Council showed.

In comparison, private sector gold investment demand during
the period dropped nearly 8 percent on the year to 1,139.3
tonnes, the data also showed.

Spot gold traded just below $1,700 an ounce on
Wednesday, up more than 8 percent so far this year.

The Bank of Korea said it now expected its ranking among
central banks around the world in terms of gold holdings to rise
to 36th from 40th.

Meanwhile, the central bank said foreign reserves rose by
$2.6 billion last month to a record $326.09 billion, extending
its record-breaking streak to a fourth consecutive month.

It attributed the increase to investment gains but the data
came after reports by traders of dollar-buying intervention by
South Korean authorities during the month to curb the won's
rapid appreciation.

On Nov. 22 alone, currency traders estimated authorities
bought up to $1 billion in the local currency market to temper a
stronger won, which hurts the competitiveness of South Korean
exporters.

Central bank officials declined to comment on the talk of
intervention.

South Korea, which had the world's seventh-largest foreign
exchange reserves as of the end of October, held 91.7 percent of
its reserves in the form of securities.